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New study shows nearly half of all insolvencies last year were filed by millennials


Around half of all insolvencies filed in 2022 were by millennials, despite only accounting for less than 27 per cent of the Canadian population aged 18 and older, according to a new study.

A study conducted by licensed insolvency trustees Hoyes, Michalos and Associates Inc. released Monday, revealed that 49 per cent of insolvencies in 2022 were filed by millennials. The study also found millennials were the only age group to see a rise in unsecured debt obligations during the year.

“The average insolvent millennial is just 33 years old, yet they are 1.7 times more likely than Baby Boomers and 1.4 times as likely as Generation X to file insolvency, relative to the population,” Ted Michalos, a licensed insolvency trustee and co-founder at Hoyes, Michalos and Associates, said in a news release.

“We’ve noticed an overall trend since 2016 that the average insolvent borrower continues to get younger, with student loan debt and extremely high-cost loans being the main drivers of their insolvency,” he said. 


Unsecured debt obligations, meaning debt that is not otherwise backed by an asset, pushed millennials toward insolvency during the year, according to the study. The age group had an average unsecured debt load of $47,283 in 2022.

“So it's kind of the perfect storm of a bunch of factors happening that have led to a massive increase in insolvencies for millennials,” Hoyes said in an interview with BNN Bloomberg Monday.

Hoyes said that unlike Baby Boomers and Generation Xers, millennials are “starting off their life” with higher levels of student loan debt.

“And when you're starting off in the hole, it makes it difficult to buy a house, get married, have kids and so you end up resorting to things like credit cards to make ends meet [or] high-cost loans,” he said, adding that factors related to the pandemic have put millennials back even further.

Student loans accounted for 30 per cent of unsecured debt loads held by the age group last year, according to the study. About 35 per cent of millennials carried debt from student loans, with an average of $16,725 owed, the study found.

Reliance on high-cost loans among the age group increased by 17.4 per cent in 2022 from the previous year, the study said. Around 55 per cent held debt from at least one high-cost loan, with an average debt of $11,940.

Credit card debt was held by 87 per cent of millennials involved in the study in 2022. Average credit card debts held by the age group increased by 1.5 per cent year-over-year to $13,948.

The Canada Emergency Response Benefit (CERB) was a factor in rising tax obligations held by the age group, the study said. Around 46 per cent of millennials had tax-related debt, rising nine per cent from the previous year.

Tax debts held by millennials in the study hit an average of $12,137 last year.


Other findings from the study included increased reliance on rapid high-cost loans among all insolvent debtors regardless of age group, as 53 per cent of total insolvent debtors had at least one loan of that kind in 2022.

Rapid high-cost loans refer to things like payday loans, high-interest lines of credit and installment loans. The study noted that the usage of these types of loans rose last year.

“We are seeing not just an increased use of traditional payday loans, but a much more dramatic rise in the use of larger, longer-term high-cost loans,” Doug Hoyes, a licensed insolvency trustee and co-founder at Hoyes, Michalos and Associates, said in the release.

The study defined this type of loan based on criteria including loans with an easy application process, often with no collateral required. Other criteria included fees or interest rates at 29.99 per cent or higher, as well as a high likelihood of approval irrespective of an individual’s credit score.

“Despite subprime lending being a small component of overall lending in Canada, its fast growth is creating a crisis among heavily indebted borrowers and these Rapid Loans are a significant driver of consumer insolvencies,” said Hoyes. 

The study said the average insolvent debtor in 2022 with a loan of this type owned money to four different lenders, with a total debt load of $12,100. Last year’s figures marked an increase from 2021, where the average insolvent debtor owed $10,819 to 3.8 different lenders.


Data for the study was compiled using information from those who filed a consumer proposal or personal bankruptcy with Michalos and Associates. The study used data from 2,700 personal insolvencies in Ontario, between Jan. 1, 2022, and Dec. 31, 2022. The results from 2022 were compared against previous studies dating back to 2011. Top Stories

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